Sabal: Where is the Philippines in Asean?

Ceteris Paribus

OUR economic managers have projected that the Philippines is set to become an upper-middle income country in 2019. We are a lower-middle income country since 1987.

There are two popular measurements of a country’s economic performance, the Gross Domestic Product or GDP and the Gross National Income or GNI (formerly known as Gross National Product). The GDP is the value of the total output produced within an economy, while GNI is GDP plus earnings of Filipino outputs produced internationally.

The World Bank classifies countries according to their GNI per capita –it measures the share of each member of the population in the GNI. It is calculated by taking the sources of aggregate income domestically and internationally and dividing it by the total population. Hence, the GNI per capita of a low-income country is less than $995, lower-middle income is within $996-$3895, upper-middle income is within $3896-$12055, and a high-income country earns more than $12056.

In the Southeast Asian region, there are two high-income countries (Singapore and Brunei), two upper-middle income countries (Malaysia and Thailand), and six lower-middle income countries (The Philippines, Indonesia, Vietnam, Cambodia, Myanmar, and Lao PDR). If our government becomes successful in implementing its major policy reforms such as the K to 12, Free Education System, Build, Build, Build, among others, then we will become the third Asean member to become an upper middle-income country.

Looking at the trends of purposively selected economic indicators, let us assess if the Philippines has the potential to fulfill its goal by 2019. I calculated the average weight of GDP Growth (annual percent), Inflation (annual percent), total unemployment (percent of labor force), Central Government debt (percent of GDP), Exports and Imports of goods and services (percent of GDP), using World Bank data.

The average GDP growth rate of the Philippines from 1994 to 2016 is 4.8 percent. If we compare this to our Asean neighbors, we rank seventh out of ten. Next to Myanmar (9.6 percent), Cambodia (7.6 percent), Lao PDR (7.1 percent), Vietnam (6.7 percent), Singapore (5.6 percent), and Malaysia (5.3 percent). We are ahead of Indonesia (4.6percent), Thailand (3.7percent), and Brunei (1.1percent). Standard growth theory tells us that poorer countries should be growing more than the richer ones.

Although we are growing faster than Brunei and Thailand, the growth rates of Malaysia and Singapore are relatively higher. This can be explained by the continued government intervention of these countries through technological advancement and innovations to sustain the momentum.

Just last October 19, the third quarter inflation in the country rose to 6.2 percent. From 1996 to 2016, we rank sixth in terms of inflation rate at 4.6 percent. Lao PDR has the highest rate at 18.3 percent, followed by Myanmar (17.6 percent), Indonesia (10.2 percent), Vietnam (6.7 percent), Cambodia (5.1 percent), Thailand (2.7 percent), Malaysia (2.5 percent), Singapore (1.6 percent), and Brunei (0.5 percent). Interestingly, the four richest countries in terms of GNI per capita have the lowest inflation rate in Southeast Asia over the 20 year period.

Unemployment refers to the working population that is without work but available for and seeking for employment. The Philippines ranks first with a total unemployment of 8.4 percent from 1991 to 2016. Ahead of our neighbors like Indonesia (6.8 percent), Singapore (3.6 percent), Malaysia (3.3 percent), Brunei (2.9 percent), Vietnam (2.3 percent), Lao PDR (1.8 percent), Thailand (1.5 percent), Cambodia (one percent), and Myanmar (0.9 percent). The data show that economic performance is not an assurance of curbing unemployment. The welfare-centered nature of the governments of Myanmar and Cambodia explains their lower unemployment level.

Government debt, as a percentage of the GDP, in the Philippines from 2008 to 2016 is 41 percent. I have only acquired data from six Southeast Asian countries. Singapore ranks first in terms of debt to GDP at 92.8 percent, then Malaysia (45 percent), Indonesia (25.7 percent), and Thailand (21.5 percent). Even richer countries have higher debts, which is similar to Japan and the United States.

Lastly, the Philippines is the seventh exporting country in the region at 38.5 percent of its GDP from 2000-2016. We are preceded by Singapore (200.8 percent), Malaysia (95.4 percent), Vietnam (69.4 percent), Brunei (67.3 percent), Thailand (67.1 percent), and Cambodia (59 percent). Lao PDR, Indonesia, and Myanmar are next to us at 32.9 percent, 28.6 percent, and 5.4 percent, respectively. Our country is also the seventh importing Asean country at 42.9 percent. Singapore and Malaysia are also the top two importing countries at 177 percent and 79.3 percent of their gross domestic products, respectively.

The data that I have presented maybe subject to several interpretations in the economics community. However, the data give us an initial assessment of the rank of our country compared to our Asean neighbors in several key economic indicators. The target of becoming an upper-middle income country is a trembling journey. The Philippine government can’t afford to miscalculate the effects of game-changer policies like the TRAIN law, higher government spending through infrastructure and free education, and the constitutional shift to federalism.

Our economy is promising but is not growing enough. We have already surpassed several socio-political, economic, and external challenges due to the reforms implemented in our fiscal and monetary policies since the 1990s. All we have to do is to elect leaders that are well-aware of the importance of achieving a strong and stable economy. We need Senators that will deepen the reforms and continue to build inclusive institutions.


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